ADB extends $120-M loan to power firm for Visayas plant

ABS-CBN News

Posted at Dec 23 2009 05:51 PM | Updated as of Dec 24 2009 03:33 AM

MANILA, Philippines - The Asian Development Bank (ADB) will extend a $120-million loan to KEPCO SPC Power Corp. (KSPC) for a plant that will provide essential power to central Visayas.

ADB said it will provide the 12-year loan to KSPC, a joint venture between Korea Electroc Power Corp. and SPC Power Corp., to build a 200-megawatt coal-fired power plant in Naga City, Cebu, on a property already being used by the Naga Power Plant Complex.

ADB said this is in line with its Energy Policy of helping countries in Asia secure adequate power supply while promoting cleaner power generation.

It noted that the plant to be build by KSPC will help address intermittent blackouts particularly on the islands of Cebu, Panay and Negros.

"Many parts of the Visayas region are economically promising but poor. Underinvestment in power generation, which has led demand to outstrip supply, threatens to hold back further development in the region," ADB said.

Joe Yamagata, deputy director general in ADB's Private Sector Operations Department, added: "A steady supply of power will help develop the local economy, creating jobs in manufacturing, tourism and other sectors that will boost incomes for local families in the region. At the same time, a reliable power supply will allow hospitals, schools, and other public services to fully function."

The multilateral lender explained that coal-based power generation is the most practical option in Cebu province since further use of geothermal resources, which already provide 70% of power in the Visayas, cannot provide enough immediate, reliable, and low-cost power.

The first 100-MW unit of KSPC's power plant is scheduled to come on line in February 2011, and the second in May 2011. KSPC will sell power from the plant primarily to electricity cooperatives on Cebu and Negros islands and to the wholesale electricity spot market once it is set up in the Visayas.

"The project will help promote a competitive market for electricity and provide a model for future private-sector investment in power generation, including renewables. These goals support the government's efforts to reform the power sector," said Yamagata.